Tuesday, May 1, 2018

Bundling Really Does Work

Bundling of consumer services has been a mainstay of consumer services packaging for decades, for good reasons. Selling a package of services (triple play of voice, internet access, voice, for example) has been shown to reduce churn.

Also, packaging multiple services for one price is a form of discounting, with the advantage that any buyer cannot easily determine how much each constituent service costs, providing some protection against price-based offers from rival providers selling any single one of the services.

Now Comcast is bundling free speed increases for customers who buy a dual-play package of linear video and internet access.

In its Houston market, Comcast is upgrading such dual-pay customers who have the 60-Megabits-per-second tier and whose internet service is bundled with other Comcast products to 150 Mbps.

Customers on the 150 Mbps tier (and buying one or more services) will see speeds increased to 250 Mbps.

Customers with the 250-Mbps service will see their speeds jump to either 400 Mbps or 1 Gbps, depending on the package.

Those deals seem to require use of the X1 modems, which Comcast wants consumers to have for other reasons, and which use the faster DOCSIS 3.1 platform.

Mobile service providers have found that consumers who buy family or multi-user plans, supporting multiple phones and services on a single account, likewise have found such customers also tend to have lower churn.

A European mobile operator able to bundle multiple services found much-lower churn rates on accounts buying two, three or four services.

In the Canadian market, quadruple-play, triple-pay and dual-play customers have lower churn rates than customers only a single service, by significant margins. The absolute lowest churn happens on accounts with four services, where accounts churned at one-seventh the level of single product accounts.

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